Peter and I have the unfortunate news to share with you that today is the last day of SafeMotos / CanGo operations.
December was an incredible month for us. We reached trip volume of more than 4,000 trips per day, grew by 260% month on month and were achieving the sub metrics on user retention, resilience to increased pricing, low customer acquisition costs and high brand awareness that reaffirmed our deep belief that Kinshasa and Central Africa are ideal markets for a superapp.
Unfortunately, we have not been able to find the funds to leverage this success into increased runway for the company. While investor enthusiasm and interest has been high, it has not translated to checks being written.
We have a choice to change strategy: fire everyone and bootstrap with a brand new pivot, or close. We tried the bootstrap strategy in Rwanda: while we achieved positive unit economics, we weren’t able to tell a story of traction to leverage more funds.
Kinshasa is among the most hostile environments on earth, it needs proper capital to make a company successful here. This is not a shoestring environment.
We’ve decided to make the challenging decision to stop while there is still enough money in the bank to pay our employees what we owe them.
We apologize to you all for failing in our mission in making a valuable and disruptive service that reorients the quality of life and access to essential services for the people of Central Africa. We are proud to be the most successful startup to have ever emerged in the region of Central Africa and we hope our textbook execution and incredible market resonance inspires others to see the region as an opportunity.
We thank you all for being on this journey with us, it was the experience of a lifetime. Peter and I feel an incredible amount of pride for what we have accomplished in Kinshasa and Kigali, we hope that you all feel the same for the journey that we have been on together.
In this video, CanGo CEO and cofounder Barrett Nash describes why sometimes concepts around scalability means that startups can (not always should) make losses before profits.
CanGo cofounders Barrett Nash and Peter Kariuki write in the Guardian that massive demographic change in Africa is giving entrepreneurial companies seeking a challenge the chance to thrive. Kinshasha-based CanGo, a ride-hailing app service, is leading the way.
CanGo is actively working to build the superapp for Central Africa. To do this we are being focused on day to day execution, but working towards a greater strategic direction. This ‘Top of the Mountain’ post is the internal document that is the direction to which the company is heading.
Phase 1: Building a Transportation Logistics Backbone in Kinshasa
Summary
This is the current stage that CanGo is at and is the most important stage as it sets the foundation for future opportunity for the company. The focus is going to be on developing a track record of wins, developing an efficient high quality motorcycle logistics platform in Kinshasa and getting the metrics of growth, retention, customer acquisition cost and unit economics to be on track and moving in the right direction.
Note that this is a summarized version of Phase 1, with additional details available on request.
Phase 2: Bringing Additional Services to Market
Summary
This phase is about following market leaders like Uber, GoJek and Rapii in bringing additional services to market. The new services brought to market will make use of CanGo investments into network of drivers and investments in user base. These new services will create new revenue streams and more value to customers. The story of this phase will be a key part of a next funding raise with execution coming post additional funding.
Rapii / GoJek Style Services
These are services that:
Have been released in other parts of the world by existing on demand companies (eg Rapii, GoJek, Uber)
Bring additional value and reason to use the app for existing / new users
Open up new revenue streams
Create a more defensible competitive landscape as the CanGo product becomes differentiated from potential new market entrants
Creates additional trips for drivers, bringing drivers more value while making a more efficient logistics network
Services could include:
Food delivery to home on demand
Food delivery to bars / restaurants on demand
Supermarket (food / alcohol) services on demand
Restock stores on demand
Amazon style online store on demand
Scheduled garbage / recycling collection on demand
ATM on demand
Developing a Services Marketplace
CanGo management has the vision of creating a diverse labor marketplace on demand, where professionals providing the sort of breadth of services that could be found in the Yellow Pages are able to advertise their services to the CanGo app user base, then use CanGo transportation service to bring service provider and customer together.
In the existing marketplace of undifferentiated low skilled service providers, we believe this represents a paradigm shift where it will create the incentives for service providers to develop and differentiate their skill set, while customers are able to get access to a large marketplace of services.
The company we are most closely following on this is Lynk in Nairobi, but we believe there is no clear market leader who has built a service the way we envision it.
Examples from user research of potential services that could be provided by third party’s via our marketplace:
TV / Refrigerator / etc repair
On demand security
Wedding / celebration activities
Plumber / electrician
Housekeeper
SWVL / Uber Van
A clear need for CanGo to meet its mission and to be successful in the African market place is to find a way to be as affordable to end users as possible. To do this, CanGo is very influenced by SWVL / Uber Van, a system that allows private companies to operate private bus routes where users can order their seat by smartphone app or USSD. In Kinshasa, with a dysfunctional mass transit system, a customer centric bus company is sorely needed, while doing multimodal functionality between buses with CanGo motorcycle trips as a last mile pickup / drop off will be a way to open up the city to an entirely new income bracket.
Banking License
Right now, there is no dominant player in the mobile money / digital payments sector in Rwanda or the DRC, with users by and large preferring cash.
CanGo believes that its suite of services and user base will give it a clear advantage is introducing digital payments to users, allowing a new way to lock users in, provide value to users and open future business opportunities.
Geographical Expansion
For CanGo to maximize impact it needs to scale rapidly once it achieves product market fit and the management team nails an execution model. We believe that the market is still wide open in Africa, with Central Africa in particular being underserved by access to technology companies in general. Likely next targets could include: Luanda, Brazzaville, Lubumbashi and Goma.
Phase 3: AI Fuelled Scaling
Summary
Once CanGo achieves a differentiated set of products in a few African market places, then it’s time to ramp up scaling as quickly as possible to leverage our learnings before bigger companies come to eat CanGo lunch. Here, we believe the secret is extremely set automated processes powered by machine learning / artificial intelligence where extremely lean teams in market with the support of set processes can launch CanGo as a ‘business in a box’ in new markets. Here, we are most excited by the emerging cities of Africa, those cities of 500,000 - 1,000,000 people that no one is currently looking at that CanGo can seek to lock into our ecosystem for the long term, as we become an essential layer for the evolution of African cities.
Objectives and Key Results (OKRs) have taken the startup world by storm. While they played a key part in the golden era of companies like Intel and Google, they took over the startup world after OKR evangelist in chief John Doerr published ‘Measure What Matters’ in 2017. It seems to have supplanted ‘lean’ as the buzz word of choice.
OKRs are great. They push a company to achieve stretch goals, make accountability easy and help create directional euphony among employees of a company. If you haven’t dived into them, I’d recommend reviewing the slideshare.
The purpose of this blog post is not to discuss the pro / cons of OKRs themselves, but rather how we built them into the DNA of CanGo with the hope that some of our lessons learned might help out with others.
For CanGo the key breakthrough on OKRs has been to realize it’s all about direction setting. You want every element of the company to be oriented in the same direction, in sequence chasing big things. It reminds me of how as a child you can turn a piece of iron into a weak magnet by rubbing another piece of iron over it: the more the uncoordinated magnetic poles are oriented in the same direction the stronger the magnet is. What we did at CanGo was to take this concept of direction setting and actually incorporate into the company infrastructure that runs our day to day. Every process of the company should be pointing in the same direction.
How did we do that?
OKRs aren’t just something talked about or worked towards, they’re reported on as well. Every management member submits a weekly OKR report to our CEO and CTO following a set format (Objectives, Key Result, what’s going well, what isn’t going well, what do you need help with). A meeting is held once a week between each head of department and the cofounders to discuss individual OKRs, as well as a full management team to discuss all the OKRs together as a team. These reports are read together Amazon briefing style, with each meeting starting in silence as everyone reads the report.
The discussion at these meetings is not about going through the report, but rather a set of identified discussion points that anyone can add to while reading the report. The talking points are prioritized with the most important at the top, going down to the least important at the bottom, with the meeting focused on working through the discussion points. Following the pareto principle of 20% of effort having 80% of impact, instead of trying to go through all the discussion points the team seeks to make real progress with the top ones, at the expense of ignoring lower ones.
In order to make sure that everyone is held to account by OKRs, CanGo’s cofounders submit their own OKRs to their board of directors for accountability and to be able to have proactive discussions on progress.
Another key thing we do to incorporate OKRs in the DNA of CanGo is setting internal processes to push towards OKRs. We have a Trello board for processes broken into daily / weekly / monthly categories, then assigned to different team members. Each card holds a process (from Process Street) that is to be completed by a set due date, aligned with if the task is daily / weekly / monthly. Every process is to be directly related to an OKR. This allows the company to develop muscle memory on working towards OKRs, means we do not reinvent the wheel every day with how we conduct our activities, and allows tasks as they become repetitive to be passed down the chain of command freeing senior staff for more strategic work.
For CanGo as a company OKRs have been an organizational breakthrough that we’re still in the early stages of optimizing, but already reaping the benefits from.
Ride-Hailing Doesn’t Make Money: Long Live The (Profitable) Superapp
Since Uber was founded in 2009, ride-hailing apps have sprung up in almost every corner of the world. However, to date, none of these companies have yet turned a profit. Last month, the company I work with, CanGo, launched a ride-hailing service in Kinshasa, the capital of the Democratic Republic of Congo. While we understand the necessity of investing in building the business, we are less an Uber and more a Gojek: because the secret to winning is to become a superapp.
The unstoppable rise of ride-hailing apps
Almost every major city in the world, especially those with populations over 2 million people, now play host to several ride-hailing apps that all compete fiercely against one another for market share. For instance, Uber has been present in the Kenyan capital of Nairobi for a while, but over the past several years competition has sprung up in the form of Bolt (formerly Taxify), Little Cab, Mondo Ride and inDriver, in addition to startups offering cheaper motorcycle taxis, such as SafeBoda.
The simple reason for this is that it actually appears relatively easy to start a ride-hailing company. First, choose your market and close your seed round from venture capitalists and wealthy individuals (especially those who have never forgiven themselves for turning down Uber back in the day). Second, use that money to build a couple of mobile apps - one for customers, one for drivers. Third, onboard some drivers who own their own vehicles, and then you’re pretty much set to go. The marketing strategy is simple, too - just offer discounted trips to hook users.
However, these low barriers to entry have also become some ride-hailing startups’ biggest headache. The overriding problem is that neither customers nor drivers feel any loyalty towards a certain ride-hailing app - both will simply use the one that gives them the best rate. If a new ride-hailing company enters a market and offers a better package to drivers, it would take just a few minutes to register as a driver on their mobile application and start earning an improved salary. In reality, many drivers use several different apps throughout the day. Similarly, if the technology is basically the same, then customers will naturally choose the cheapest option, regardless of how long they have been using one or the other.
It’s all too easy for copy-cats with significant venture capital to come along and undercut the incumbent. In June 2019, Bolt reentered London and decided to take just 15% commission from their drivers - half that of Uber. As a result they can offer lower prices to customers and have inevitably gained significant market share from Uber, as the apps and waiting times are almost identical. But is such a business model really sustainable?
For the second quarter of 2019, Uber reported losses of $5.2 billion, while their growth is also showing signs of slowing - earlier this year a huge restructuring program saw them lay off over a third of their marketing team. Many argue that Uber and other ride-hailing apps will only become profitable once they remove the driver from the car, when everything is autonomous, but how long can they wait? Perhaps instead they will finally realise the need to incorporate other services into their business. Indeed, they’ve made the first step by acquiring electric scooter startup JUMP, however, what has become clear is that right now, ride-hailing as a sole service has a long way to go before it is either profitable or sustainable.
In the end, only superapps will win
Two examples of ride-hailing startups that have seemingly negated these issues are Grab and Go-Jek. Both based in South East Asia, they are superapps, where within the same mobile application customers can choose between several different on-demand services, including taxis, buses, food delivery, and professional services or blue collar workers. Both also offer invaluable mobile payment and banking services to the region. While they began by offering motorbike taxis on demand, it is the other services they have gradually incorporated into their superapp that means they are nearing profitability or are powerful enough to fight off competition from other ride-hailing companies.
Go-Jek’s founder and CEO Nadiem Makarim believes that food delivery is now the company’s main business. Makarim has been quoted as saying that GoJek is close to profitability in all its services, apart from ride-hailing, thanks to delivering a staggering 50 million food orders a month. Similarly, Kell Jay Lim, co-chief of staff to the CEO and regional head of GrabFood, claims that success in its food delivery service is also driving the company towards profitability. Grab’s position in the region is also so strong that Uber finally decided to pull out of the ride-hailing war in South East Asia and agreed to the sale of its regional operations to Grab in May 2018 (albeit in return for a lucrative 27.5% stake in the company).
The superapp seems almost indestructible. Yes, Uber has UberEats for food delivery, but it’s in a different application altogether. If you really want to hook users on your app, surely it makes sense to put all the services in the same place? Because users of Grab and Gojek use the apps for pretty much everything, copy-cats have a very low chance of knocking either of their perch, as has happened and will continue to happen to Uber.
A superapp for Kinshasa
At CanGo we have built Kinshasa’s first ride-hailing app, which was a logical place to start considering Kinshasa is a city of 14 million people (predicted to be the largest in the world by 2075) with a total lack of any modern transport systems. There is also a dire need for safer transport as locals claim the highest chance of being robbed or kidnapped is actually by your moto taxi driver.
But this is only the start - we want to build Africa’s first superapp, we want to do it in Kinshasa, and we want to tailor it towards the lower-class African end user. In the coming weeks we plan to launch on-demand delivery in Kinshasa having learnt valuable lessons in our innovation lab, Kigali, over the past few months. Once we have made Kinshasa a fortress, as Gojek and Grab have done in South East Asia, we plan to roll out the same on-demand services across other Central African cities larger than 500,000 people that have so far also been underserved by technology, and will one day be some of the largest cities in the world.
Ride-hailing still works, and is especially beneficial in cities where transport is broken and/or dangerous, and maybe one day it will indeed become a profitable service, but in order to realise this possibility it should be just the first service of many that a ride-hailing startup plans to offer.
